Correlation Between BW Offshore and Medical Properties
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Medical Properties at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BW Offshore and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Medical Properties Trust, you can compare the effects of market volatilities on BW Offshore and Medical Properties and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BW Offshore with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Medical Properties.
Diversification Opportunities for BW Offshore and Medical Properties
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0RKH and Medical is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and BW Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BW Offshore are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of BW Offshore i.e., BW Offshore and Medical Properties go up and down completely randomly.
Pair Corralation between BW Offshore and Medical Properties
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.5 times more return on investment than Medical Properties. However, BW Offshore is 1.99 times less risky than Medical Properties. It trades about 0.04 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.01 per unit of risk. If you would invest 2,372 in BW Offshore on December 2, 2024 and sell it today you would earn a total of 683.00 from holding BW Offshore or generate 28.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.39% |
Values | Daily Returns |
BW Offshore vs. Medical Properties Trust
Performance |
Timeline |
BW Offshore |
Medical Properties Trust |
BW Offshore and Medical Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BW Offshore and Medical Properties
The main advantage of trading using opposite BW Offshore and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Medical Properties can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Medical Properties will offset losses from the drop in Medical Properties' long position.BW Offshore vs. Creo Medical Group | BW Offshore vs. Spirent Communications plc | BW Offshore vs. Charter Communications Cl | BW Offshore vs. Gamma Communications PLC |
Medical Properties vs. Silver Bullet Data | Medical Properties vs. Batm Advanced Communications | Medical Properties vs. Fidelity National Information | Medical Properties vs. Charter Communications Cl |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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